House asking prices up 1.2% as buyer interest continues to rise

17 February 2009 / by Rebecca Sargent
House asking prices saw an increase of 1.2 per cent in January, according to the latest house price index from Rightmove.

The news comes as the Royal Institution of Chartered Surveyors (RICS) reports the third consecutive monthly increase in buyer interest, hinting at the beginnings of a recovery.

However, both RICS and Rightmove say that a recovery in the housing market remains a long way off.

In its house price index, Rightmove says that the increase in house asking prices is down to "falsely optimistic" New Year sellers, which, the property website says, is normal in January.

Commenting, Miles Shipside, commercial director of Rightmove, said: "Serious sellers need to set their initial asking price more realistically to get one up on the competition and take advantage of increasing numbers of bargain-hunters who have set their own price floor ahead of the return of mainstream purchasers."

It is clear from the RICS figures that the majority of potential buyers showing an increased interest in the market at the moment are existing owner occupiers, while property investors are also making a come back.

Nevertheless, mortgage finance remains at the root of the housing market problem, economist Simon Rubinsohn at RICS, said: "Interest from owner occupiers is likely to persist over the comings months as those with large deposits look to capitalise on the drop in house prices.

"However, a sharply deteriorating employment picture may eat away at this improvement in sentiment pushing potential buyers back to the sidelines.

"To prevent this happening and help restore an orderly housing market, the government urgently needs to address the issue of the availability of mortgage finance. It is essential that guarantees for residential mortgage backed securities are introduced sooner rather than later," Mr Rubinsohn added.

This is backed up by Rightmove, which has seen reports of agents struggling to deal with the number of buyer enquiries, but as mortgage finance remains unattainable, no offers are being made.

Rightmove's Miles Shipside concluded: "Unfortunately, the current enquiry feast is being blunted by the mortgage famine. While leaving a great opportunity for the cash-rich to strike a deal, it also highlights the extent to which the financial sector needs to put its house in order before market recovery can truly begin."



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